Liquidity Risk and Islamic Banks: Evidence from Pakistan

In order to safely and successfully run the business operations and to build healthy relations with the stakeholders, the banks as intermediaries, should manage the supply and demand of the liquidity. This study seeks to investigate the firm’s level determinants of liquidly risk of listed Islamic banks of Pakistan. For this purpose, liquidity risk is used as dependent variable while size, tangibility of assets, leverage, profitability and age are employed as independent variables. The results indicate that leverage, tangibility and age are important determinants to define the liquidity risk of Islamic banks of Pakistan while liquidity risk has statistically insignificant relationship with profitability and size of Islamic banks of Pakistan.